Do I need mortgage protection insurance?
Is 2019 the year you’re planning to buy your first home or move up the ladder? If so, you may find that, sadly, few of your friends and peers are doing the same. According to property experts, the housing market was ‘subdued’ in 2018, and is expected to continue in the same way this year. Uncertainty over Brexit is, of course, playing a part, with the Bank of England predicting that house prices could fall by as much as 30% in the event of a no-deal exit from the EU.
Many of us are also feeling insecure in our employment, which means that if you are buying a new pad in 2019, taking out mortgage protection insurance could be the wisest ‘move’ of all. But what is MPPI, exactly? Listen up!
What is mortgage payment protection insurance?
Mortgage payment protection insurance (MPPI) is a type of income protection designed specifically to pay your mortgage should you become unable to work through no fault of your own. You can get cover for up to 70% of your gross income, and the payments can also help meet household bills and council tax while you’re not earning.
Why do I need mortgage cover?
For many homeowners, the mortgage is their biggest monthly expense - and not everyone has a big enough financial cushion to fall back on, should their income take a knock. According to last year’s Cost of Resilience report by our partner Zurich UK, many of us are more likely to insure our mobiles than our income, leaving a third of the population admitting they would struggle to recover from loss of earnings.
Fortunately, the number of homes being repossessed is declining, according to the Council of Mortgage Lenders. In 2016, the number of properties taken into possession was 7,700, compared with more than 10,000 in 2015 and the lowest number since 1982. But even without something as severe as repossession, millions of homeowners would face going into debt to see them through a tight patch.
What kind of mortgage payment insurance do I need?
As with most types of insurance, MPPI policies can be tailored to suit your needs. The two main types of mortgage protection insurance are accident and sickness insurance and redundancy cover.
According to the Office for National Statistics, an estimated 137.3m working days were lost due to sickness or injury in the UK in 2016. Unless your employer offers a good sick pay scheme, you could find yourself significantly out of pocket should you suffer an illness or injury that requires time off work.
Redundancy insurance pays out if you’re made involuntarily redundant and can tide you over while you look for a new role. Do bear in mind that, if you know redundancy is a possibility at the time of taking out the cover, the insurers might not pay out. MPPI policies that cover accident, sickness and unemployment are sometimes known as ASU policies.
With just one in 10 adults in the UK having an income protection policy in place, mortgage brokers are calling for more education about mortgage protection for clients. If you’d like to find out more about mortgage cover or any of our other protection insurances designed for a rainy day, call our team on 0800 062 0373 or compare mortgage protection quotes online with our comparison tool.